In 1992, just a year after Macedonia established its independence, a group of professional, experienced journalists founded Krug as the country’s only newspaper publishing company independent from government influence. They sought to provide Macedonians with an alternative to the two large government-controlled newspapers at the time. With this in mind, in March 1996, Krug launched Dnevnik with an initial daily circulation of 5,000 copies. After some early roadblocks, including unreasonably high terms from the government affiliated distribution network and printing house, Dnevnik established itself with SEAF’s help as the leading daily newspaper in Macedonia, with a current daily distribution exceeding 70,000 newspapers.
An Industry Leader
When SEAF Macedonia invested in Krug in 1999, the company had built up a reputation for quality independent journalism but was not known for its commercial success. SEAF recognized that Krug’s distribution network could be expanded to deliver third-party publications (newspapers and magazines), given that other titles in the market lacked sufficient size to self-distribute. SEAF’s equity investment in the business strengthened Krug’s distribution capacity and facilitated the purchase of equipment that improved the profitability of the business. SEAF also assisted the company with improving its business strategy, financial planning, and seemingly arbitrary advertising system, including a critical decision to raise the prices of its flagship newspaper and to launch an evening newspaper along with its morning newspaper. As a direct result of these decisions, Krug became Macedonia’s largest privately owned distribution network for print media. In 2004, SEAF and Krug’s senior management sold the company to the leading German print media company WAZ for a considerable profit.
Benefits to the Local Community
Beyond its financial success, the company generated impressive social and development impacts. Over the life of the investment, Krug’s full-time workforce more than doubled, increasing from 60 to 143 employees. Due to restricted access to the government-controlled kiosks, Krug established the first network of work-for-hire newspaper “boys” in Macedonia to sell their papers directly to the customers in the street. Including these employees, Krug provided over 300 local jobs at the time of SEAF’s exit from the company. Lastly, and of equal importance, Dnevnik has been widely credited for professionalizing the print media industry in Macedonia.